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Review By Dilip Davda on April 30, 2024
• WEL is an integrated EPC company providing BoP solutions for Wind and Solar power generation companies.
• It marked quantum jump in its bottom lines from FY23 onward with its prudent cost management plans.
• Based on FY24 annualized earnings, the issue appears reasonably priced.
• It has approx. Rs.98+ cr. order book as of the filing of this offer document.
• Investors may park funds for the medium to long term rewards.
ABOUT COMPANY:
Winsol Engineers Ltd. (WEL) is an integrated engineering, procurement, construction and commissioning company providing Balance of Plant (BoP) Solutions for both Wind and Solar power generation companies. Its core services for BoP Solutions includes Foundation work, Substation Civil and Electrical work, Right of Way services, Cabling to substation and Grid, and Miscellaneous work.
WEL's clients are in the renewable energy industry who prefer WEL for the BoP solutions due to its historic track record of timely completion of project, its expertise and extensive experience in the business and cost efficiency. In addition to WEL's core BoP Solutions, the company also provides Operation and Maintenance services for Plant handling and monitoring. It is ISO-9001-2015, ISO-14001-2015 & ISO-45001-2018 certified company demonstrating its execution capabilities in quality. The company has total team strength of more than 200 (Engineers and Technicians) for execution of various projects. It has been executing various projects on a Turnkey basis for various clients including Suzlon, Adani Green Energy, Powerica Limited and KP Energy Limited.
As of the Date of this Red Herring Prospectus, the company has more than 41 Major Ongoing projects having total value of approximately Rs. 119.53 cr. out of which invoices of more than Rs. 21.15 cr. has been submitted as on March 31, 2024 resulting order book of Rs. 98.38 cr. which has been still unexecuted or for which invoice has not been submitted, based on management estimates, suggesting strong order book. According to the management, this situation has come for the first time in their business history and is indicative of prospects lying ahead. The company will have approx. 70% revenue generation from Wind Mills and the rest from Solar systems. As of December 31, 2023, it had 270 employees on its payroll.
ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 3115200 equity shares of Rs. 10 each to mobilize Rs. 23.36 cr. at the upper cap. It has announced a price band of Rs. 71 - Rs. 75 per share. The issue opens for subscription on May 06, 2024, and will close on May 09, 2024. The minimum application to be made is for 1600 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 27.01% of the post-IPO paid-up capital of the company. From the net proceeds of the IPO, it will utilize Rs. 15.00 cr. for working capital, and the rest for general corporate purposes.
The issue is solely lead managed by Beeline Capital Advisors Pvt. Ltd., and KFin Technologies Ltd. is the registrar of the issue. Beeline Group's Spread X Securities Pvt. Ltd. is the market maker for the company.
The company has issued initial equity capital at par and issued further equity shares at a fixed price of Rs. 1000 per share in June 2019. It has also issued bonus shares in the ratio of 420 for 1 in December 2023. The average cost of acquisition of shares by the promoters is Rs. NIL, Rs. 0.96, and Rs. 4.85 per share.
Post-IPO, company's current paid-up equity capital of Rs. 8.42 cr. will stand enhanced to Rs. 11.54 cr. Based on the upper IPO price band, the company is looking for a market cap of Rs. 86.51 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total revenue/net profit of Rs. 22.25 cr. / Rs. 0.49 cr. (FY21), Rs. 60.80 cr. / Rs. 1.09 cr. (FY22), and Rs. 65.45 cr. / Rs. 5.18 cr. (FY23). For 9M of FY24 ended on December 31, 2023, it earned a net profit of Rs. 6.77 cr. on a total revenue of Rs. 52.02 cr. The quantum jump in bottom lines for FY23 and 9M-FY24 is attributed to its change of servicing/materials offering that brought higher margins, which were enjoyed by the suppliers earlier. The management is confident of maintaining the trends of higher revenue and net earnings.
For the last three fiscals, it has reported an average EPS of Rs. 2.68, and an average RONW of 43.61%. The issue is priced at a P/BV of 4.14 based on its NAV of Rs. 18.14 as of December 31, 2023, and at a P/BV of 2.24 based on its post-IPO NAV of Rs. 33.49 per share (at the upper cap).
If we attribute annualized FY24 super earnings to its post-IPO fully diluted paid-up capital, then the asking price is at a P/E of 9.58 and based on FY23 earnings, the P/E stands at 16.70. Thus the issue appears reasonably priced.
For the reported periods, the company has posted PAT margins of 2.23% (FY21), 1.79% (FY22), 7.92% (FY23), 13.04% (9M-FY24), and RoCE margins of 11.71%, 16.14%, 46.19%, 44.18% respectively for the referred periods.
DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy based on its financial performance and future prospects.
COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Konstelec Engg. as their listed peers. It is trading at a P/E of 30.0 (as of April 30, 2024). However, they are not comparable on an apple-to-apple basis.
MERCHANT BANKER'S TRACK RECORD:
This is the 36th mandate from Beeline Capital in the last three fiscals (including the ongoing one), out of the last 10 listings, all got listed with premiums ranging from 5.88% to 200% on the date of listing.
Review By Dilip Davda on April 30, 2024
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
The initial public offer (IPO) of Winsol Engineers Limited offers an early investment opportunity in Winsol Engineers Limited. A stock market investor can buy Winsol Engineers IPO shares by applying in IPO before Winsol Engineers Limited shares get listed at the stock exchanges. An investor could invest in Winsol Engineers IPO for short term listing gain or a long term.
Read the Winsol Engineers IPO recommendations by the leading analyst and leading stock brokers.
Winsol Engineers IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Winsol Engineers IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Winsol Engineers IPO is to subscribe.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Winsol Engineers IPO.
The Winsol Engineers IPO allotment status will be available on or around May 10, 2024. The allotted shares will be credited in demat account by May 13, 2024. Visit Winsol Engineers IPO allotment status to check.
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The company has several ongoing litigations against itself, its promoters and directors. This includes several income tax and GST proceedings, which could be ruled against the company, resulting in a loss of reputation and revenue.